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SBD Global/May 9, 2014/Finance

BT Beats Analysts' Fourth Quarter Estimates As Football Lures Customers

BT "beat analysts’ earnings estimates for the sixth consecutive quarter" as the biggest U.K. broadband provider "lured new customers with the promise" of free football and rugby games, according to Amy Thomson of BLOOMBERG. Shares "rose the most in eight months." In a statement, the London-based company said that earnings before interest, taxes, depreciation and amortization in the fourth quarter ended March 31 rose 2% to £1.71B from a year earlier. That "beat the average" £1.66B estimate of analysts. The company has about 5 million customers for BT Sport, the trio of channels free for customers who sign up for broadband service. BT "has made a multibillion-pound bet," outbidding pay-TV leader Sky for broadcast rights to "some of the most popular" football matches and "using the matches as bait for new broadband customers" (BLOOMBERG, 5/8). In London, Daniel Thomas reported BT "has found early success in its unexpectedly aggressive but costly move into providing sports TV to its customers alongside traditional telecoms services." BT has spent more than £2B building the sports TV platform, mostly on Premier League and Champions League football games. BT CEO Gavin Patterson "promised future growth based as the company next turned to 'disrupting' the mobile telecoms market in a similar way to TV." BT "will create a mobile broadband network using small cellular sites and wifi hotspots that would be bundled into its fixed broadband offers." Patterson: “The investment in BT Sport is really coming through now. There is a buzz around BT." Patterson added that BT "would also augment its TV service with additional interactive functions and more content." The results "beat most analysts’ forecasts." Citi's Simon Weeden said the “solid numbers” provided reassurance about progress of earnings and free cash flow in the “environment of the company’s heavy spending on sport content” (FINANCIAL TIMES, 5/8). REUTERS' Kate Holton reported BT "pledged to increase its dividend by between 10 to 15 percent this year and next and said it would extend its share buyback programme" to '15-16. Hargreaves Lansdown Stockbrockers head of equities Richard Hunter said, "Strong fourth-quarter numbers added to what had already been an impressive showing from BT, such that there is much scope for appreciation of the full-year results" (REUTERS, 5/8).

BROADBAND BLUES: In London, Juliette Garside reported the company "has insisted its investment in football was all about stopping the slow bleed of phone and broadband customers to Sky and other operators." Since the launch of BT Sport last summer, "its share of all new broadband signings is now typically higher than 75%, compared with 50% before." It also said that "it had completed its project to extend superfast fibre-optic cables to street cabinets serving two-thirds of the UK, 21 months ahead of schedule." BT's network now passes 19 million premises, and work has started on all 44 local authority contracts "to build a publicly funded rural network that will extend fibre to more than 90% of the country" (GUARDIAN, 5/8).
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